Judgment in US$1bn Russian Aircraft insurance litigation

12/06/25

In AerCap Ireland Ltd v AIG Europe SA [2025] EWHC 1430 (Comm) the Commercial Court has found that aircraft lessors are entitled to recover under contingent insurance policies issued by the London insurance market in respect of aircraft that were on lease to Russian airlines at the time of the invasion of Ukraine in 2022 and which have wrongfully been retained in Russia. The sum payable to AerCap, the world’s largest lessor of commercial aircraft which has lost over 100 aircraft that were on lease to Russian airlines, is over US$1 billion (excluding interest).

In his judgment, Butcher J finds that the aircraft were ‘lost’ for the purposes of the insurance policies on 10 March 2022 when Russian Government Resolutions No. 311 and 312 prohibiting export of various items, including commercial aircraft, came into force, and that the loss falls within the ‘war risk’ cover provided by the contingent insurance (as opposed to the ‘hull all risk’ cover) because the proximate cause of the loss was government restraint or detention. The judge rejected arguments raised by insurers that the contingent insurance did not apply where detained aircraft remained in the possession of the Russian airlines, or that the lessors were obliged to pursue alternative claims as additional insureds under the airlines’ insurance policies before they could recover on their own contingent insurance. The judge further held that the lessors had taken all reasonable steps to recover the aircraft and rejected insurers’ arguments that payment under the policy was prohibited by US, EU or UK sanctions.

The judgment is of potentially wider legal interest in that Butcher J clarifies (a) the test to be applied to determine whether property has been ‘lost’ when it still exists but the owner has been deprived of possession of it (in short, the test as clarified by Butcher J is whether, on a balance of probabilities, the deprivation has become permanent); (b) the approach to determining whether property is in the ‘grip of the peril’ at the time when an insurance policy is cancelled or expires such that it will still be covered even if it cannot be said to have become ‘lost’ until some time later; and (c) the purpose of contingent insurance in the aviation market. In this case, Butcher J held that the aircraft were in the grip of the war risk peril from 5 March 2022 when a ‘recommendation’ not to return aircraft to western lessors was issued to Russian airlines by the Russian Federal Air Transport Agency.

The judgment may also be of wider interest to other parties currently engaged in litigation concerning the loss of aircraft in Russia in 2022. Claims are currently being pursued by AerCap and others in the Commercial Court under the airlines’ insurance policies, while claims under different contingent policies brought by other lessors are also proceeding in various US jurisdictions.